Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Richardson Electronics Ltd (RELL, Financial) achieved a significant milestone in the number of wind turbine generator modules sold.
- The company generated $7.2 million in operating cash flow during the fourth quarter and ended the year with no debt and $24.3 million in cash and cash equivalents.
- Consolidated gross margin for the fourth quarter was 31.1% of net sales, a significant improvement compared to 27.9% in last year's fourth quarter.
- Richardson Healthcare sales increased by $0.7 million or 24.3% compared to the fourth quarter of fiscal 2023.
- The company has a strong backlog of $147.8 million at the end of the fourth quarter of fiscal 2024, providing a solid base for future growth.
Negative Points
- Net sales for the fourth quarter of fiscal 2024 were $47.4 million, compared to $58.8 million in the prior year's fourth quarter, indicating a decline.
- Sales for Green Energy Solutions (GES) declined by $10.6 million from last year's fourth quarter.
- Operating expenses were $14.8 million for the fourth quarter of fiscal 2024, compared to $15.0 million in the fourth quarter of fiscal 2023, indicating a slight decrease but still high.
- The company reported an operating loss of $0.1 million for the fourth quarter of fiscal 2024 versus operating income of $1.4 million in the fourth quarter of last year.
- Net loss for the fourth quarter of fiscal 2024 was $0.1 million compared to net income of $4.1 million in the fourth quarter of fiscal 2023.
Q & A Highlights
Q: In the third quarter, you mentioned a broadening of customers wanting the ULTRA3000. Did this trend continue into the fourth quarter? What caused the sequential step down in GES revenue?
A: (Gregory Peloquin, Executive Vice President - Power and Microwave Technologies Group) Fluctuations in revenues and bookings are common when introducing new products. Despite the sequential step down, we added over 20 new owner operators buying wind turbine pitch energy modules and four new platforms. Strong bookings in Q4 are transitioning into a strong Q1 FY '25.
Q: PMT sales in the wafer fab were up 71% sequentially, but overall PMT sales stepped down. What was weaker within PMT?
A: (Gregory Peloquin, Executive Vice President - Power and Microwave Technologies Group) The 71% increase was off a small base in Q3. Q4 was stronger than Q3 in revenue for the semiconductor market, but still considerably lower than FY '23 levels.
Q: Do you still expect an uptick in wafer fab demand in fiscal 2025?
A: (Gregory Peloquin, Executive Vice President - Power and Microwave Technologies Group) The real uptick is expected in calendar year 2025 or the second half of FY '25. We will see growth off a smaller base in Q1 and Q2.
Q: Can we expect the current gross margin to be sustainable?
A: (Gregory Peloquin, Executive Vice President - Power and Microwave Technologies Group) Margins are stronger on products we design, manufacture, and test. As engineered solutions grow, we expect to maintain these margins.
Q: How should we think about inventory going forward?
A: (Gregory Peloquin, Executive Vice President - Power and Microwave Technologies Group) We made strategic decisions to buy product to support growth. As sales increase, this will lower our inventory. However, one significant vendor is doing last-time builds, which will offset some reductions.
Q: What was the impact of the semi-cap equipment space on revenue in fiscal 2024?
A: (Gregory Peloquin, Executive Vice President - Power and Microwave Technologies Group) Revenue with the largest customer was down $25 million in FY '24 versus FY '23. The semi-cap equipment space as a whole was down from $40 million last year to $14 million this year.
Q: What was the annualized loss for the CT tube business in fiscal 2024?
A: (Wendy Diddell, Chief Operating Officer, Executive Vice President, Director) The annualized loss was just under $3 million.
Q: Can you clarify the backlog in PMT specifically?
A: (Gregory Peloquin, Executive Vice President - Power and Microwave Technologies Group) The backlog for PMT going into FY '25 is $60 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
